Financing To Fuel Your Business
SBA doesn’t make direct loans to entrepreneurs to start or grow businesses. It guarantees banks and lenders for the money they lend to small businesses owners.
First, let’s dispel a myth – SBA doesn’t make direct loans to entrepreneurs to start or grow a business. Instead, it provides a guarantee to banks and lenders for the money they lend to small businesses owners. This guarantee protects the lenders interests by promising to pay a portion of the loan back if the business owner defaults on the loan. So when a business applies for an SBA loan, it is actually applying for a commercial loan through a bank or authorized SBA lender, structured according to SBA requirements with an SBA guarantee.
Essentially, SBA loans alleviate the risk associated with lending money to business owners and entrepreneurs who may not qualify for traditional loans – thus opening up lending opportunities to thousands of entrepreneurs, start-ups, growing businesses, minorities and veterans.
What types of loans are available?
There are several types of loans that business can take advantage of, each developed to suit the needs of your business. The 7(a) loan program, for example, can be used for a number of purposes including working capital, revolving funds, equipment purchases, refinance existing debt and more.
In addition, SBA can help business owners in need of financing to help with disaster recovery. Disaster loans – available to homeowners, renters, businesses of all sizes and private, nonprofit organizations – can be used to repair or replace items that have been damaged or destroyed in a declared disaster including, real estate, personal property, machinery and equipment and inventory and business assets.
If you are looking for smaller loan amounts (under $50,000), consider the Microloan program or the SBA Express program. A subset of the 7(a) loan program, SBA Express is designed for businesses with financing needs up to $350,000. The proceeds can be used to finance a variety of business activities and no collateral is required for loans up to $25,000.
It’s also worth knowing that fees on all SBA loans are currently extremely favorable to veterans and are currently set at zero for loans under $150,000.
Is my business eligible for a loan?
While each loan has its own specific qualification criteria (here’s the deal on 7(a) eligibility), talk to your bank or lender about your needs and business profile.
Take note, in addition to meeting SBA requirements, lenders will also take into consideration credit factors such as your business cash flow, equity investment, collateral, etc.
A bridge loan is a short-term, high-interest loan providing a quick source of cash for commercial or individual needs. It serves as a bridge between periods of funding.
A bridge loan is a short-term, high-interest loan that provides a quick source of cash for commercial or individual needs. It is called a bridge loan because it serves as a bridge between one period of funding and another, more permanent source of funding.
How a Bridge loan functions with an example:
To illustrate, suppose a company has been approved for a $1 million loan from a bank. However, this money will not be available for six months, and they are running short on cash. The company could apply for a six-month bridge loan of $50,000 to cover their expenses until the money from the $1 million loan comes through.
Why it matters:
Often, businesses and individuals find themselves in need of fast funding during an interim period while they work out access to larger amounts of funds. The bridge loan essentially "bridges" the gap between when money runs out and when more money will be received.
The cost of bridge loans is often much higher than more traditional financing methods, and they are only meant to be used in special circumstances. If a company must rely on short-term, high-interest financing to continue operations, chances are good that the company is not viable in the long run.
This loan will have a no pre-payment penalty incase you want to pay off the loan sooner. A calculator outlining what monthly payments to expect is displayed below.
There is nothing more frustrating then being declined from your local bank for not having the proper collateral to secure a business loan. With our Unsecured Term Loan, that will not be the case.
With terms ranging from 2-5 years with interest rates from 4.99% - 9.99%, how could you go wrong. This loan will also have no pre-payment penalty if you decide to pay off the loan sooner.